Above all, the environment of the Simple Structure tends to be at one and the same time simple and dynamic. A simple environment can be com- prehended by a single individual, and so enables decision making to be controlled by that individual. A dynamic environment means organic structure: Because its future state cannot be predicted, the organization cannot effect coordination by standardization. Another condition common to Simple Structures is a technical system that is both nonsophisticated and nonregulating. Sophisticated ones require elaborate staff support struc- tures, to which power over technical decisions must be delegated, and regulating ones call for bureaucratization of the operating core.
Among the conditions giving rise to variants of the Simple Structure, perhaps the most important is stage of development. The new organization tends to adopt the Simple Structure, no matter what its environment or technical system, because it has not had the time to elaborate it administra- tive structure. It is forced to rely on leadership to get things going. Thus, we can conclude that most organizations pass through the Simple Struc- ture in their formative years.
Many small organizations, however, remain with the Simple Struc- ture beyond this period. For them, informal communication is convenient and effective. Moreover, their small size may mean less repetition of work in the operating core, which means less standardization. Of course, some organizations are so small that they can rely on mutual adjustment for coordination, almost in the absence of direct supervision by leaders. They constitute a hybrid we can call the simplest structure, a Simple Structure with the open lateral communication channels of the Adhocracy.
Another variant—the crisis organization—appears when extreme hostility forces an organization to centralize, no matter what its usual structure. The need for fast, coordinated response puts power in the hands of the chief executive and serves to reduce the degree of bureaucratization as well. (Of course, highly elaborated organizations do not eliminate their technostructures and middle lines when faced with a crisis. But they may temporarily set aside their power over decision making.) James D. Thomp- son (1967) describes a special case of crisis organization, what he calls the synthetic organization. This is temporary, set up to deal with a natural disas- ter. The situation is new, and the environment is extremely hostile, hence the emphasis on leadership. (Of course, permanent organizations that spe- cialize in disaster work, such as the Red Cross, would be expected to develop standardized procedures and so to use a more bureaucratic form of structure.)
Personal needs for power produce another variant, which we call the autocratic organization. When a chief executive hoards power and avoids the formalization of behavior as an infringement on his right to rule by fiat, he will, in effect, design a Simple Structure for his organization. The same result is produced in the charismatic organization, when the leader gains power not because he hoards it but because his followers lavish it upon him. Culture seems to figure prominently in both these examples of Simple Structure. The less industrialized societies, perhaps because they lack the educated work forces needed to rnan the administrative staff jobs of bu- reaucratic structures, seem more prone to build their organizations around strong leaders who coordinate by direct supervision. The forces of autocra- cy or charisma can sometimes drive even very large organizations of devel- oped societies toward the Simple Structure, as in the Ford Motor Company in the late years of its founder.
Another factor that encourages use of the Simple Structure is owner- management, since this precludes outside control, which encourages bu- reaucratization. The classic case of the owner-managed organization is, of course, the entrepreneurial firm. In fact, the entrepreneurial firm seems to be the best overall illustration of the Simple Structure, combining almost all of its characteristics—both structural and situational—into a tight ge- stalt. The classic entrepreneurial firm is aggressive and innovative, con- tinually searching for the risky environments where the bureaucracies fear to tread. But it is also careful to remain in market niches that the en- trepreneur can fully comprehend. In other words, it seeks out environ- ments that are both dynamic and simple. Similarly, the entrepreneurial firm is careful to remain with a simple, nonregulating technical system, one that allows its structure to remain organic and centralized. The firm is usually small, so that it can remain organic and the entrepreneur can retain tight control. Often, it is also young, in part because the attrition rate among entrepreneurial firms is high, in part because those that survive tend to switch to a more bureaucratic configuration as they age. The en- trepreneur tends to be autocratic and sometimes charismatic as well; typ- ically, he has founded his own firm because he could not tolerate the controls imposed upon him by the bureaucracies in which he has worked. Inside the organization, all revolves around the entrepreneur. Its goals are his goals, its strategy his vision of its place in the world. Most en- trepreneurs loath bureaucratic procedures—and the technostructures that come with them—as impositions on their flexibility. So their unpredictable maneuvering keeps their structures lean, flexible, and organic.
Source: Mintzberg Henry (1992), Structure in Fives: Designing Effective Organizations, Pearson; 1st edition.